Casual legal: Paperwork matters in land transactions
DISCLAIMER: This article is meant to provide information only and is not intended to provide legal advice. You should seek the advice of legal counsel to address your specific set of circumstances. Although every effort has been made to provide current and accurate information, changes to the law may cause the information in this article to be outdated.
By Hannah Schmakeit
Reynolds Mirth Richards Farmer LLP
Alberta Municipalities Casual Legal Service Provider
Many municipalities will sell and buy land from time to time, whether as part of property tax enforcement or parcel development. While most people remember the Municipal Government Act, RSA 2000, c M-26, (the “MGA”), requirements for advertising land sales and accepting offers, they often forget additional requirements under the Statute of Frauds, 29 Cha 2, c 3, and the Land Titles Act, RSA 2000, c L-4 (the “LTA”).
In Alberta, under the Statute of Frauds, contracts to convey an interest in land are only enforceable if the contract is both written and signed by all parties. Under the MGA, agreements must be signed or authorized by either (i) a designated officer (if council has authorized that officer), or (ii) the chief elected official or another council‑authorized person and a designated officer. While land sale agreements may be signed electronically, the documents that go to the Land Titles Office to transfer title are different. The Land Titles Office, pursuant to the LTA, maintains Alberta’s Torrens system of land registration, in which each parcel of land has a unique certificate of title that is conclusive proof of ownership. Because of this system, specific paperwork is required to transfer land (and record other interests in land). In practice, documents often need to be couriered between cities, provinces, or even countries to complete a transaction.
Once the land sale agreement is signed, there are three ways to complete the transaction. First, in Alberta, the Western Conveyancing Protocol (“Protocol”) closing is the most common method for residential land transactions. It relies on the lawyers for both parties giving specific undertakings and trust conditions to protect the parties and allows the seller to be paid on the closing day before the Land Titles Office processes the transfer of the land to the buyer. Protocol closings cannot be used for commercial real estate, agricultural real estate, condominium unit sales by developers, and a few other circumstances. In the alternative, title insurance closings rely on a title insurer to protect the buyer against defects, fraud, or registration gaps between closing day and the day title transfers. Using a title insurance closing allows the seller to be paid on the closing day before the Land Titles Office processes the transfer of the land to the buyer. This has the benefit that both parties do not necessarily require lawyers to represent them, though it’s often still recommended. Finally, the traditional closing involves an escrow agent (often a lawyer) holding documents and funds in trust until all conditions are met such the Land Titles Office processing the transfer of the land to the buyer, providing extra security for complex or commercial transactions. Each method is chosen based on transaction complexity, risk, timelines, agreement, and party requirements.
Regardless which closing method is chosen, it is always recommended to contact a lawyer before accepting money for land or giving possession of land without the appropriate documents being prepared and submitted to the Land Titles Office to reflect the changed interests in land.
To access Alberta Municipalities Casual Legal Helpline, Alberta Municipalities members can call toll-free to 1.800.661.7673 or email casuallegal [at] abmunis.ca (casuallegal[at]abmunis[dot]ca) and reach the municipal legal experts at Reynolds Mirth Richards and Farmer LLP. For more information on the Casual Legal Service, please contact riskcontrol [at] abmunis.ca (riskcontrol[at]abmunis[dot]ca), or call 310.MUNI (6864) to speak to Alberta Municipalities Risk Management staff. Any Regular or Associate member of Alberta Municipalities can access the Casual Legal Service.
